Sweetheart Bank Deals Stiff Homeowners Facing Foreclosure

Have you heard of the "Shared Loss Agreements" the banks are getting from the FDIC?

With Shared Loss Agreements the FDIC is making banks whole on the foreclosed properties which strips away any motivation to do loan modifications. Why, because foreclosures are very profitable! And your tax dollars are paying for it




(My first attempt to embed a video hope it works)
Link if it doesn't:

You Tube Video

Basically the bank picks up the bad loan for 70% on the dollar, turns around and forecloses, takes the cash and then make a claim to the FDIC for the difference up to what would have been 100% of the orginal loan amount.

I had to stop and think...WTF?


Here is just one example (and there are more):

The original loan amount was $500,000.

"Missed payments and other foreclosure costs bring the amount up to $550,000.

At 70%, OneWest bought the loan for $385,000

The home is located in Stockton, CA, so its current value is likely about $185,000 and OneWest sells the home for that amount.

Total loss for OneWest is $200,000. But this is not how FDIC determines the loss.


FDIC takes the $500,000 and subtracts the $185,000 Purchase Price.

Total loss according to the FDIC is $315,000.

If the FDIC is covering “ONLY” 80% of the loss, then the FDIC would reimburse OneWest to the tune of $252,000.

Add the $252,000 to the Purchase Price of $185,000, and you have One West recovering $437,000 for an “investment” of $385,000.

Therefore, OneWest makes $52,000 in additional income above the actual Purchase Price loan amount after the FDIC reimbursement. "

Source:



The entire agreement between Indymac/OneWest can be read here:


PDF File Shared Loss Agreement


The FDIC response to this alarming information has been this:

"OneWest has not been paid one penny by the FDIC in loss-share claims. The loss-share agreement is limited to 7% of the total assets that OneWest services, and OneWest must first take more than $2.5 billion in losses before it can make a loss-share claim on owned assets. In order to be paid through loss share, OneWest must have adhered to the Home Affordable Modification Program (HAMP)."


FDIC Press Release


I guess we'll have to wait to see how many homeowners in trouble magically don't qualify for a loan modification so that Onewest meets it 2.5B loss to get their financial windfall.

AND REMEMBER - there are many, many more banks that got the same deal!






[edit on 20-2-2010 by Julie Washington]

[edit on 20-2-2010 by Julie Washington]

[edit on 20-2-2010 by Julie Washington]

S&F for you!

I've wondered why banks would rather take a loss foreclosing or short-selling a property rather than renegotiate the mortgage for less of a loss with the owner.

Of course this is crooked and just plain evil. But can we look a little farther down the road? Where is this leading and what is the purpose? What is the big picture in all of this?

Is it because all of the homes in these areas will eventually be returned to wildlands per the Agenda 21? Is the goal to make blocks of areas uninhabited?

Or will homes be held by a corporation and later "reassigned" to those who the corp. deems as "deserving"? Will there be some new deals stuck in the future as to who will be allowed to have a home and who will not?

Will these properties be traded off to foreign interests in lieu of national debt?

There must be a reason for these actions. Some group at the top is appealing to the greed of someone lower on the totem pole and that is how it is being accomplished. But, what is the motivating reason by the ones at the top who are pulling the strings?

I want to give you a star for this piece Julie but not sure how to go about it!

With regard to motivation it really is a case of follow the money on this one !

The banks who qualify (all of them by the sounds of it!) for this bail out are sitting on bad real estate loans be they household or commercial. This in turn makes their balance sheets look dire - maybe even insolvent.

In the event of a bank becoming insolvent isn't it the FDIC who guarantee the people's money - ie your money will be safe /repaid even if the bank goes under ?

So this is a back-door bail-out, prop up the bank quick before it goes to the wall from all its bad real estate deals.

Sounds simplistic but it could work !

There is no easy solution for this housing mess.

However, wouldn't it have been cheaper to have the government just take these loans and modify them and keep people in their homes.

If modifications had just started 2 years ago to keep people in their homes perhaps we wouldn't have seen the melt down in the housing market, the decrease in property values while it pulled down the entire Global markets including employment and the stock market.

Increasing foreclosures just devaluates the banks assets even more. It doesn't make sense.

There are those that wouldn't agree, especially renters.

If the government had believed in the trickle UP theory instead of the trickle down theory we could have avoided most of this mess.


[edit on 22-2-2010 by Julie Washington]